The question of whether or not we are all socialists now is not as silly as it may sound. Jon Meacham and Evan Thomas argue in their cover story for Newsweek that the United States, though remaining a center-right nation culturally, is increasingly coming to resemble the European social-democratic welfare states. While conservatives blast the Obama Administration’s new bailout and stimulus plan as filled with pork and not doing enough to produce real stimulus of the economy, and those on the Left argue it has not gone far enough and has capitulated to conservatives who want more tax cuts, most Americans simply want something to pass, and are deferring to the corporate based economic advisers who put it together.

But I think that Meacham and Thomas are right about their main point: the American economic system is not one based on laissez-faire economics, but a mixed economy that has long accepted the contours of a modern welfare state. Years ago, in a pathbreaking but not too well known book, The United States as a Developing Country, the historian Martin J. Sklar argued that at the turn of the century, the United States was transformed from a country based on a “proprietary-competitive market” system to that of an emerging “corporate administered market.”

The result, according to Sklar, was the emergence of a new “corporate capitalism” that mixed together elements of both populism, capitalism and socialism. The modern American state, he concludes in an essay he wrote for this book, was a system that mixed public and private, socialism and capitalism- “A Mix,” Sklar calls it, that has made the United States not only stable and dynamic, but the most progressive of any nation in the world.

Some conservatives might gripe- the Newsweek authors quote Sean Hannity as calling the new stimulus package the “European Socialist Act of 2009,” but the fact is that our system has functioned in the tradition of a mix between capitalism and socialism for a long time- sometimes leaning in one direction, sometimes in the other. Conservatives who fight this reality are tilting at windmills. Rather than fight necessary regulatory measures, it would be better to see that they work efficiently, and not be so restrictive and punitive as to threaten business enterprise itself.

Thus, as Meacham and Thomas argue, Obama has to pump up the economy, while at the same time move to cut the growth of entitlements, spending on health care, and retirement costs—something many on the Left will try to prevent.

Decades ago, in the years of FDR’s New Deal experiments, one self-styled conservative businessman wrote the following to one of the main drafters of the National Industrial Recovery Act. “I think I am still a conservative,” businessman and Republican Charles L. Brown claimed, “but I believe that a new set of plans is essential to preserve the conservative order of things. The trouble is that most of our business and professional friends do not understand that the old methods will not serve. New arrangements are necessary to save the economic structure. I think it is not radical, certainly not revolutionary, to change the methods of business leadership….the methods you and your associates are inaugurating are necessary in order to retain the existing industrial order.”

Today, in different and yet equally difficult times, Mr. Brown’s advice is still well taken. Maybe, like FDR, Obama will be looked at as the president who once again saved capitalism.

Click here to view the 34 legacy comments

Click here to hide legacy comments

34 Comments, 34 Threads

1.
David Thomson

“Republican Charles L. Brown claimed, “but I believe…”

Charles L. Brown was simply taking a good guess. He was relying, at best, on mere anecdotal evidence. However, economic scholars like Harold L. Cole and Lee E. Ohanian provide conclusive evidence that the New Deal was a disaster. They are able in 2009 to look at the overall historical data—and not rely on mere guessing:

I’ve never accepted these silly notions. Conservatives have always tried to roll back these corruptions of our system. Just because people have become accustomed to them does not make them accepted, nor acceptable.

I think it was 1910 when the corporation laws were passed. Four years later, the school system was developed by Dewey. Rockefeller convinced him to make it a system to develop workers for the corporations, rather than entrepreneur schools.

Thus began the move towards enslavement of the populace by chaining their minds. They taught the people that you can work for a company 40 years, and everything will work out for you. Big Lie.

Entrepreneurship is freedom. Working for someone else is just wage-slavery. Eventually, they betray you, or just let you down, and you’re left broke and wondering what happened. Towns, and even whole counties grow dependent upon a corporation, then are abandoned. Poverty always follows, because they lack the diversity that comes from entrepreneurship.

To try to counter this, people turn to government to provide the security they lack. They thus turn over even more of their freedom (and money!), and the slide into Socialism has begun. Corporations allow great things to happen, but the use of the school system to support them is the beginning of evil. It turns people into sheeple.

Ron Radosh relies too much on liberal historians—who are also economic illiterates. At the very best, they have a vague understanding of how economies grow and thrive. Radosh has not read dissenting authors like Harold L. Cole and Lee E. Ohanian and found them wanting. On the contrary, he likely hasn’t spent ten minutes in his entire life studying the works of such scholars. And when it comes to reading actual economists, Radosh probably is only familiar with John Kenneth Galbraith and a few other socialists. Indeed, it is safe to assume that our host has lived a very sheltered existence.

For a broader perspective, may I (again) recommend Philip Bobbitt’s The Shield of Achilles. Bobbitt argues that between the War Between the States (or, in Europe, the Franco-Prussian War; same time frame) and WWI, the social contract underwent a change (the fourth in a series) from promising to give the citizen a nation to promising to better the well-being of the citizen. The change that is now happening is the fifth in that series, to a social contract based on providing the best opportunity, whether it is as a citizen desiring to live in a free country or as a member of a religion seeking to live under the most rigid reading of its laws. And the “state” can be a geographical entity or a political network like al Qaeda. (Terror and Consent, also by Bobbitt.)

Bobbitt can’t make the future clear, but he can make the past and present clear, and that’s a good start. One thing: if you do take on The Shield of Achilles, read the introduction several times, until you can say “gee, that should be obvious–but it’s not.” If you don’t, you may loose much of what the book has to offer.

(No, I have no financial stake here, but I think a lot of arguments could be moved forward a lot if people heard Bobbitt out on this.)

” . . . but the fact is that our system has functioned in the tradition of a mix between capitalism and socialism for a long time- sometimes leaning in one direction, sometimes in the other. Conservatives who fight this reality are tilting at windmills. Rather than fight necessary regulatory measures, it would be better to see that they work efficiently, and not be so restrictive and punitive as to threaten business enterprise itself.”

This is a straw man argument. There are no conservatives who are against all regulations. They don’t exist. It is a figment of your imagination. These individuals merely warn that any proposed regulations be thoroughly studied to ensure that they do not cause more harm than good. This is the guiding question that can never be ignored: do we really need to do this? Isn’t there an alternative option?

“Entrepreneurship is freedom. Working for someone else is just wage-slavery. Eventually, they betray you, or just let you down, and you’re left broke and wondering what happened.”

Mr Malone your comments are quite interesting. Yes, I agree, Entrepreneurship is freedom. Yet, consider when you go to the Grocery Store; do you expect what you want to be there? How about the gas station? And, if perchance, you should visit a hardware store, do you expect to see the items you want openly displayed for your possible purchases?

As a truck driver, delivering groceries, I have to say, I do like my job. Really, I do!! No, it doesn’t pay the most but, we’re happy, our house is paid for, our kids are off in their lives and we’re loving every moment with the Grand kids. Self Employed and business owners are the bed rock of this nation. Yet, I would like to think, those of us who work in a “job” are a little more important than just being tax generators for the Government.

I do not consider myself to be “abandoned” by my Employer. If I desire to increase my retirement, savings, whatever, it’s up to ME to educate myself and plan accordingly. Yes, there are actually some of us out here that do that sort of thing! I may be in the minority of working class citizens who actually PLAN for my/our future but, I’m sure every time you go to that Grocery Store, you’re glad that there are people like me out there. But, not many really consider where the milk or eggs you’re purchasing came from; just as long as it’s there, right?

No Sir, POVERTY does NOT always follow a good career, not if appropriate plans are made. That requires a little bit of personal responsibility and planning, a couple points an overwhelming majority of my working counter parts seem to have forgotten. This, I will admit. Government is NOT the answer and individuals need to wake up and realize this!

Having a good job can be a rewarding career. And, being self employed can do the same. Each supports the other. Without one, the other can’t exist. Only problem is, now a days, Government is attempting to be the one to establish the RULES by which we work and play. That is the problem, not the selected career path.

Yes, yes, oh yes gimme the kool-aide, let me drink from the cup. You’ve convinced me that Conservatives are greedy capitalists without a social bone in their body and Liberals are here to regulate us, because we know that liberals didn’t profit from the feeding frenzy on wall street and didn’t grab from the tax-payer funded spending spree.

Your motives are pure, your intentions are good. Your here to show the misguided the real path to a more perfect union. Please continue to tell us how you should spend our money.

An utterly facile essay — but one with a kernel of truth that Radosh seems unable to grasp. “Business” in the sense of “Big Business” has never been conservative. The sweeping reforms of the early 20th century and the New Deal were pressed by dominant businesses to regulate their scrappier competitors, who were disinclined to keep clean slaughterhouses, pay living wages, recognize unions, sell safe cosmetics and rugs, protect wage earners from low female and child labor rates, and fix prices to prevent “ruinous competition.” The National Recovery Act quote is absurd. The NRA was a government-dictated system to fix prices at [artifically] high levels — clearly a boon to business interests who did not want to compete in the price market. It was declared unconstitutional and would be declared so today.
The kernel of truth Raadosh misses is that Big Business has not only continued this “benevolent intervention” but also gone into market manipulation. NAM, banks, utilities, durable goods manufacturers, and a host of other Fortune 500 companies, — all egged on by Jack Welch, Paul Krugman, and Thomas Friedman — are pushing the intrusive climate change agenda, “re-regulation,” higher taxes, “no doc” mortgages, and pork spending because they want the government to acquire or subsidize their inefficient goods. They want it to create by mandate new markets where there is no demand. The Dow companies want socialized medicine so they can dump current and legacy obligations to workers on the taxpayers. Health care companies (including not for profits) are demanding government support for an array of new “services” for those who don’t need them –e.g., by state laws dictating what has to be covered (Viagara anyone?)in health insurance policies. And on it goes — Eurpoean “state economies” brought to the once vibrant New World markets. Lenin said something to the effect that “when we hang the bourgeoise, the capitalists will stand in line to sell us the rope”. Nooses are on sale for Presidents’ Day.

“but the fact is that our system has functioned in the tradition of a mix between capitalism and socialism for a long time- sometimes leaning in one direction, sometimes in the other.”

Agreed. Given the inherent “Boom and Bust” cyclical nature of laissez-faire Capitalism, I don’t really see how we could have any kind of economic stability without some form of socialist control, (note the lower case).

“Conservatives who fight this reality are tilting at windmills.”

There’s a cure for that. Vote them Price Support subsidies, and they quiet right down.
Worked for Agribusiness, didn’t it?

Of course, then you have yet another group benefitting from the socialist trough, and when you eliminate it, they can no longer function as the free marketeers they claim to be.

For evidence of this, one need look no further than the elimination of the Construction Differential Subsidies to US Shipyards. All of the spiffy new cruiseliners are built over in Europe today, and American yards are left only with US Navy contracts.
Newport News Shipbuilding, which builds aircraft carriers and submarines, tried entering the double-hulled oil tanker market aboout 15 years ago, and it was a disaster. Their “Double Eagles” just didn’t get off the ground.

“Rather than fight necessary regulatory measures, it would be better to see that they work efficiently, and not be so restrictive and punitive as to threaten business enterprise itself.”

But those regulatory measures lie within the government’s bailiwick, so they cannot NOT become more onerous. Passing new regulations is what governments DO. And this is what generates the impetus to swing the pendulum back from the stagnationary effects of socialist policy.

In the closing days of his Administration, Bill Clinton promulgated new standards for the allowable amount of arsenic in drinking water, standards that had been acceptable for the 8 prior years of his tenure were suddenly found to be unhealthy, and these new standards were dropped in George W Bush’s lap.

While this may have been a Clinton political sop to his Green constituency, and those nice fellows from the beverage industry who own bottled water brands,(and who write such LARGE campaign checks), these new standards would have mandated basically entirely new plant at every county and municipal waterworks in the country.

I believe “W” succeeded in stopping this, one of the last of Clinton’s scams, but I still hear from people about how “Bush allowed arsenic in the drinking water”, when all he really did was let the Clinton-era standards be.

Not all regulations SHOULD be allowed to work efficiently. Some regulations shouldn’t exist at all.

“Maybe, like FDR, Obama will be looked at as the president who once again saved capitalism.”

Maybe…and maybe blue monkeys will fly out of my butt.

Where is the vision in Obama’s Stimulus package?

Where is the new TVA? the Regional High Speed Rail? The Interstate System?

I see no infrastructural capital improvements at all, (the public tennis courts at Virginia Beach, notwithstanding).

What I see is a lot of Lifestyle Subsidies.

Maybe, like LBJ, Obama will be seen as just another slick good ole boy politician whose failed initiatives built a lot of vertical ghettoes downtown.

“Jon Meacham and Evan Thomas argue in their cover story for Newsweek that the United States, though remaining a center-right nation culturally, is increasingly coming to resemble the European social-democratic welfare states.”

That’s because the MSM and the Obamatons will do anything within their means to make that paradigm happen. Leeches, sycophants, and Marxists all. Dante has circle 8 waiting for everyone of you.

“‘A Mix,’ Sklar calls it, that has made the United States not only stable and dynamic, but the most progressive of any nation in the world.”

A mix yes, best defined by the term used to describe other such systems: fascism. And far from being stable, it is inherently unstable, which is why the socialist element keeps gaining. Worse, it is only ‘progressive’ in the capital P sense of that term, which is a synonym for what is in fact Fascism.

Which is why Progressives prefer it.

Far from tilting at windmills, there is nothing inevitable about which political-economic system America will have. It was freer in the 19th century (not pure, but far better) and it can be again. Law is necessary and beneficial for a free people. Fascist economic controls which ignore individual rights to liberty and voluntary trade are not.

No one should give up just because those who want to transform the U.S. into Sweden, then Venezuela are temporarily ascendant. The UK and the US both pulled back to a large degree from disaster during the Thatcher and Reagan administrations and American can do the same, only more so.

All it takes is the acceptance of better idea, the courage and will to put them into practice. Those ideas – in the works of Rand, Mises, Hazlitt, and others – are known and available to anyone who will take the time and effort to study and think.

Booms and busts are a built-in feature of a “mixed” economy; decisions about the allocation and efficient use of resources have been for quite some time the responsibility of the government and private industry. Tariffs, the Farm Bill, CAFE standards and minimum wage laws aren’t advocated by government alone. Private interests lobby for protectionist trade rules, agricultural price supports, stricter emissions regulation and higher wages; Washington obliges to consolidate and preserve political power.

We’re where we’re at now because of our mixed economy. Un-mixing the economy would be the most productive solution in real terms.

Maybe, like FDR, Obama will be looked at as the president who once again saved capitalism.

I think you mean saved the current crop of capitalists from the next generation of upstarts. If we’d have “saved” the economy of the ’70s, Walmart would still be a country store in Arkansas, and Kmart would still be king of the ‘burbs. And we’d be getting our software from IBM as several times the price Microsoft charges. And all the lefties who love their Apples wouldn’t have them, because IBM would never have allowed Apple to get that big.

The problem is that the order that is being preserved is not going to involve the reform of the underwriting standards used for the CRA that caused the financial mess in the first place. Unless this is accomplished, we will continue to dump, via derivatives, on to the financial markets unsound lending practices, and then the cycle gets repeated, requiring another round of bail outs for the financial system.

The 1992 Boston Fed study that uncovered alleged racial bias in lending, which became the basis for Clinton, Reno, and Gorelick to demand that they push the mortgage lending beyond all accountable standards, has long been discredited as faulty methodology.

I understand that the vast number of people who got loans under the CRA do make their payments and are trying to act in good faith and be credit worthy. They know they’ve been given a break and are trying to be worthy of their good fortune. But just enough of that system is dysfunctional and failing to tighten the standards just a bit more is unconscionable. If you improve the standards you most certainly are going to end up denying loans to some people. But if it takes more risk out of the Fannie Mae and Freddie Mac paper put out there on the market, then we add more stability to the system and lessen the chance that this is going to happen again.

Socialism is not a viable economic system since as Von Mises demonstrated it lacks a pricing mechanism. The current economic structure of the western democracies is sufficiently socialist that there is no market based pricing mechanism for capital (interest rates are set by fiat by the government, .aka. central bank). As a consequence such countries cannot maintain themselves. They consume more than they produce (so they all run deficits, even after monetary debasement). We are now experiencing the beginning of the failure of our socialist system. The slower our return to private property, free markets and commodity backed money the slower our return economic recovery will be.

$8 Mike Davis – You make some good points. I submit to you that you sound more like an entrepreneur than a worker. The person I described is passive. You are not. Think about that.

My point was simply that the decisions regarding your financial situation is primarily in someone else’s hands. You call someone else Boss. He determines your pay scale. He chooses if you work tomorrow. You may have chosen your lot and, indeed, be satisfied. It doesn’t change the fact that you chose wage-slavery. Shackles find only willing wrists.

Of course, Radosh is right. We have accepted the term “mixed economy” to describe the US for decades — since the 50s. To be sure, our economy tilts more toward freedom of enterprise and competitive (not “free”) markets than those of Europe, but it’s nothing new for the government to take an active hand in spurring the economy, mitigating the impact of recessions or bailing out companies and whole sectors (what was the savings and loan bailout about?).

Does any of this add up to “socialism?” probably not any more than Social Security and similar measures did in the past.

I buy the mix of socialism and capitalism premise but I do not buy Obama’s methods as being necessary to preserve what we have. As to Obama’s ability to pump up the economy while narrowing entitlements, I am extremely skeptical; I suspect that he sees both a depression and increased entitlements as opportunities to consolidate Democrat power. The real danger he faces is that Americans, used to living well, will grow restless and throw his congress, and prehaps even him, out when things don’t start to turn around within the next 2-3 years.

From what I can see, the so-called “stimulus plan” is short on pump priming and long on entitlements. It will be interesting to see reactions in a couple of years when those of us who still have jobs face decreasing income coupled with increasing taxes. Watch California – it is already happening here and talented people are leaving in droves. When it happens to the rest of the country, people will have nowhere to go and the only option, assuming Obama and company have not succeeded in making net tax takers (those who get more in govt. services than they pay in taxes) into the majority, will be to throw the bastards out.

Jon Meacham and Evan Thomas argue in their cover story for Newsweek that the United States, though remaining a center-right nation culturally, is increasingly coming to resemble the European social-democratic welfare states.

American Liberals have a tendency to view European Social Market economics as simply a more interventionist form of American Market Capitalism. So you often see the metaphor of a continuum applied to describe their distinctions. But this is a flawed means of comparison. The European ‘Social Market’ model is fundamentally a political system w/ commercial components. It is not interventionist according to the meaning that most American writers intend – which is actually an ad-hoc Populist approach rather than a thoroughly managed, state sponsored, economy. Interestingly, though it often produces very bad economic policies, American Populism may protect the United States from the excesses of Social Market political economics. For these rely on an acceptance of permanent social stasis, rigid class hierarchy, and both psychological and existential passivity that I think is anathema to even the most Liberal Americans.

* I would advise against looking to Newsweek for economic or social commentary.

This was pretty funny..
“Rather than fight necessary regulatory measures, it would be better to see that they work efficiently, and not be so restrictive and punitive as to threaten business enterprise itself.”

Actually, as a conservative I believe most if not all labor regulations are unnecessary. That’s just to start with. So, a more honest debate tactic on Radosh’s part would be to explain why he thinks American people should give up their freedom – instead of claiming that this submission is completely necessary.

So we should all submit to the state as our new master and overlord and just get used to it? Those of us that work hard, get an education, and achieve a good salary should be happy to sacrifice our hard won gains to our those Americans who can only be described as lazy, unproductive, envious, helpless, and who believe the government, via the productive, owe them something? No. I will be no man’s indentured servant and will fight this until my dying breath. If you refuse to try, you deserve to fail.

So let me get this straight, we are suppose to embrace a economic system (Socialism) that put 120+million people in mass graves in the 20th century and displaced and ruined the lives of millions more?? The likes of National Socialist party ie. NAZI, Union of Soviet Socialist Republics ie, USSR, Peoples Socialist Movement ie. Red China, the list goes on.
Sorry, not this American!
Any American that embraces socialism should have their citizenship stripped from them and deported!
There are three words that make us Americans and these words go against the tenants of Socialism,,,
LIBERTY, INDEPENDENCE and INDIVIDUALISM

In the fine tradition (“quite a long time”) of the mixed economy, Mr. Radosh has given us quite a mixed essay. What’s the larger point here? We’ve always had this, so lie back and enjoy it? I especially appreciated these howlers:

“Conservatives who fight this reality are tilting at windmills. Rather than fight necessary regulatory measures, it would be better to see that they work efficiently, and not be so restrictive and punitive as to threaten business enterprise itself.”

Ah, the old “just make government work *better*” canard. This has been around almost as long as the “mixed economy”. Has it occurred to our author that we know most “necessary measures” (care to *name* a few, rather than mealy-mouth it?) won’t work, and *that’s* the reason we fight it? Tilting at Quixotean windmills? How about fighting for what’s right?

“… Obama has to pump up the economy …”

By taking hundreds of billions in taxes and splaying it around as he and Washington see fit? Sure, that’s always worked.

“Decades ago, in the years of FDR’s New Deal experiments …”

Oh, is *that* what they were. Many of us windmill-tilters call them “entitlement programs”, which you claim the president will get around to *cutting* (?!?) once he’s done with this “pumping” he “has” to do. Really curious how that’s going to go over.

Again, seems like Mr. Radosh’s theme is “don’t sweat it, we’ve always done it this way and we have to press on.” To paraphrase our new erudite president (with a bit more emphasis): WE’VE TRIED IT YOUR WAY – AND LOOK WHERE IT’S GOTTEN US!